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Obama Defends Proposed Health Office

WASHINGTON — The Congressional Budget Office said Saturday that a new agency proposed by President Obama as a way to cut health costs might save only $2 billion in its first four years, and that there was a high probability that “no savings would be realized.”

The report came as Mr. Obama tried to build support for his health care plan, arguing that small-business owners would benefit because they could buy coverage through an insurance exchange and receive tax credits to help pay for employee health benefits.

In his weekly radio and Internet address on Saturday, Mr. Obama said that small businesses were being “crushed by skyrocketing health care costs.”

“Because they lack the bargaining power that large businesses have and face higher administrative costs per person, small businesses pay up to 18 percent more for the very same health insurance plans — costs that eat into their profits and get passed on to their employees,” Mr. Obama said.

Republicans and some Democrats say Mr. Obama’s proposals to cover the uninsured would fuel the growth of health spending. In draft legislation sent to Congress on July 17, the president proposed creation of an “independent Medicare advisory council,” which could set payment policies for Medicare, subject to approval by the president. The administration could put the policies into effect unless they were blocked within 30 days by Congress.

The budget office said the proposal did not have enough teeth to guarantee substantial savings. The draft legislation “does not explicitly direct the council to reduce” Medicare spending, “nor does it establish any target for such reductions,” said Douglas W. Elmendorf, director of the budget office.

Under the president’s proposal, the five council members would be doctors or experts in medicine or health policy. As a result, Mr. Elmendorf said, “the council could be weighted toward medical providers who might not be inclined to recommend cuts in payments to providers or significant changes to the delivery system.”

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President Obama argued for his health care plan on Saturday.

The council could produce greater savings if it had clear authority to recommend broad changes in Medicare coverage and benefits, Mr. Elmendorf said. Likewise, he said, Congress could guarantee greater savings by requiring an across-the-board reduction in Medicare payments if cost-cutting goals were not met.

However, health care providers, which are already lobbying against Mr. Obama’s plan, would object even more strenuously to such proposals.

Under the president’s bill, Mr. Elmendorf said, the first potential savings would occur in 2016, and savings could total $2 billion from 2016 to 2019. That is a relatively small share of Medicare spending in those years, which the budget office says will total at least $2.8 trillion.

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Peter R. Orszag, director of the White House Office of Management and Budget, insisted that the president’s proposal, with some minor changes, could save money in the long run. “The point of the proposal was never to generate savings over the next decade,” Mr. Orszag said. “Instead, the goal is to provide a mechanism for improving quality of care for beneficiaries and reducing costs over the long term.”

Influential House Democrats oppose Mr. Obama’s call for a Medicare council. Representatives Charles B. Rangel of New York, chairman of the Ways and Means Committee, and Pete Stark of California, chairman of the panel’s health subcommittee, say Congress has a duty to set Medicare payment policy. And they worry that a future Republican president could use the council as a tool to make deep, damaging cuts in Medicare.

In his radio address, Mr. Obama pressed ahead with his argument for why the nation’s health care system must be overhauled, barely mentioning that the legislation has been delayed in the Senate until after the August recess. The White House Council of Economic Advisers issued a report Saturday to counter Republican criticism that Democratic health care plans would be costly to small-business owners. In the weekly Republican address, Representative Cathy McMorris Rodgers of Washington State argued that the Democratic proposals were “bankrolled by a small-business tax.” She said that jobs would “evaporate” under the Democratic plan because businesses would not be able to afford to meet their payrolls.

The National Federation of Independent Business, which represents small businesses, opposes the Democratic health care legislation under consideration in the House.

“Now is not the time to burden our nation’s job creators with new, expensive mandates, punitive payroll taxes and a new government-run program,” said Brad Close, the association’s vice president for public policy.

Congressional aides returned to Capitol Hill on Saturday to keep trying to reach a compromise.